This paper examines the sources of productivity growth for the U.S. telecommunications industry from 1935 to 1987. These years encompass both the pre- and post-AT&T divestitureperiods. We formulate a structural model that accounts for both changes in the cost and the demand side of the industry. We measure the contributions of aggregate demand, information intensity of the economy, price-cost margins, relative factor prices, direct and indirect effects of technological progress, and R&D investment on total-factor productivity (TFP) growth rate. We show that TFP growth rate as conventionally measured is a seriously biased measure of rate of technical change in this industry.
ASJC Scopus subject areas
- Social Sciences (miscellaneous)
- Economics and Econometrics